Canyon Creek Compression Company

Third Revised Volume No. 1

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Effective Date: 07/01/2002, Docket: RP02-356-000, Status: Effective

Original Sheet No. 203 Original Sheet No. 203 : Effective

GENERAL TERMS AND CONDITIONS

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(ii) Canyon shall then determine the amount of Cost

of Service recovered, as follows: the amount of Cost of Service

recovered shall be determined by totaling the Shippers' monthly

invoices billed for basic transportation service during the relevant

Semi-Annual Period. Basic transportation service rates are the rates

on Sheet No. 6 for Rate Schedules FCS and ICS, exclusive of ACA

surcharge, penalties and other charges.

(iii) The semi-annual Cost of Service deferral cost

amount shall be determined by taking the difference between the dollar

amounts derived in Section 37.7(c)(i) and Section 37.7(c)(ii), herein.

The resulting amounts shall be reflected in Canyon's Semi-Annual COS

Period current deferral account.

(iv) Canyon shall determine the semi-annual change

in deferral associated with Cost of Service as follows:

(1) Canyon shall debit the Cost of Service

current deferral account in the event the current six (6) months Cost

of Service amounts (as defined in Section 37(d)(i)) exceed the total

value of invoices billed Shippers for basic transportation and

compression service during such period.

(2) Canyon shall credit the Cost of Service

current deferral account in the event the current period Cost of

Service amounts (as defined in Section 37(d)(i)) are less than the

total value of invoices billed Shippers for basic transportation and

compression service during such period.

(v) Canyon will assess carrying charges on the

applicable Account No. 182.3, Cost of Service Deferral Account carrying

charge base. The carrying charge shall be the product of the

following:

(1) The carrying charge base shall be the

prior period's balance in the applicable Cost of Service Deferral

Account and an adjustment necessary to effectuate quarterly compounding

of carrying charges.

(2) Canyon shall compute a semi-annual

carrying charge rate utilizing the effective annual FERC approved

interest rate prescribed in Section 154.501 of the FERC's Regulations.

Such rate shall be expressed to the nearest one ten-thousandth of 1%.

(d) Canyon shall determine the Deferred Account element

of the revised rates under Section 37.3 as follows: